Electricity consumption and carbon dioxide emissions: The role of trade openness and manufacturing sub-sector output in Ghana

Globally, a great deal of effort is geared towards promoting electricity generation from renewable sources to mitigate the impact of global warming. Notwithstanding, many developing countries including Ghana still depend mostly on crude-fired thermal plants for electricity generation despite the adverse effect this can have on lives, properties and national economies via climate change. Meanwhile, studies investigating electricity consumption and carbon dioxide emissions nexus for Ghana and other developing countries are scarce. This paper examines the relationship between electricity consumption and carbon dioxide emissions within the framework of the EKC hypothesis for Ghana for the period 1971–2014 by employing the Bayer and Hanck cointegration approach and the ARDL bounds testing with structural breaks. The long-run and the short-run parameter estimates indicate that electricity consumption and trade openness have positive relationship with carbon dioxide emissions. The EKC hypothesis was tested for the manufacturing sub-sector output for Ghana by examining both the necessary and sufficient conditions which gave evidence of a U-shaped relationship, suggesting that for the period under study, the EKC hypothesis is invalid for the manufacturing sub-sector of Ghana. Appropriate policies have been suggested based on results of the study.